Writing in the Globe's Economy Lab blog, MLI senior fellow Linda Nazareth looks at the numbers on where Canada's job growth is coming from, finding the strongest growth in the bottom quartile of earners. "Four years after the recession, the Canadian job market is still a kind of work in progress," writes Nazareth.
Linda Nazareth, Nov. 14, 2013
It has been four years since the recession ended, and we keep hearing about how well Canada's economy did compared with that of the United States. We were back to our pre-recession level of employment pretty quickly; they still are not. But before we all get a bit too smug (in a nice, Canadian sort of way), maybe we need to take a good look at the numbers. They show that Canada is creating jobs – but maybe not precisely where we would like them to be.
In an ideal world, there would be lots of jobs for workers with all kinds of skills – but not much about today's global economy is ideal. In the U.S., for example, a recent analysis in The Wall Street Journal shows a kind of two-track recovery in that country's job market. Employment is rising nicely in occupations that pay the most (senior manager, doctor, lawyer) but not rising much in the lowest-paid occupations (fast-food worker, retail sales clerk, unskilled construction labourer). It is not a happy situation, and it is increasing income disparities in that country. But that's the U.S. – are things any better in Canada?
To find out, I looked at Canadian employment by occupation as of the latest month available (October, 2013) and ranked, from highest to lowest, the 30 or so occupational groups for which Statistics Canada provides earnings data. At the top were senior managers (whose hourly wage, although most are paid weekly, comes out to about $52.67); at the bottom were retail salespeople (average $14.12, although that figure is likely inflated by the fact that supervisors are included in the count). Then, I looked at the share of each of these occupational groups as a percentage of total employment (for example, about 0.3 per cent of Canadian workers are senior managers, while about 7 per cent are retail workers).
From those calculations, I was able to group workers into one of four quartiles (each containing one-quarter of all workers in the country) by earnings. The top quartile had the senior managers, as well as many professional workers, while the bottom had a mix of service sector workers and categories such as "helpers" on construction sites.
So how did the four quartiles of earners do in terms of employment growth?
Between October, 2009 (the recession supposedly ended in May of that year as judged by a blue-ribbon panel of economists brought together by the C.D. Howe Institute, but because the data are not adjusted for seasonality it makes more sense to use October as the benchmark) and October, 2013, overall growth in Canadian employment was 6.8 per cent. Growth was just 4.4 per cent for the highest-earning quartile, but a solid 11.5 per cent for the bottom quartile. The group second from the top grew 7.3 per cent in employment terms. The one second from the bottom, a category comprising mostly clerical and manufacturing-oriented workers, experienced the slowest growth, at 5.7 per cent.
You can pick your favourite explanation for what is going on. The slow growth of top-tier workers probably had something to do with restraint in the public sector, as well as financial sector caution after the recession. On an annual basis, you actually can see that employment was down every year in this category, with the exception of the 12 months ended October, 2012, when there was fairly robust growth.(See chart.)
In the lowest tier of earners, there has been growth in employment every year – the only category for which this is true. This past year in particular, employment was up a strong 5.7 per cent. That's good news – sort of. It likely reflects a migration of workers who used to be in the second and third tiers toward lower-paid occupations. In the third tier (the category that includes the manufacturing and clerical workers), employment fell in the year ended October, 2012, and grew just 0.7 per cent over the past 12 months.
So what is the takeaway? Well, unlike the U.S., we are not actually talking about a two-speed job recovery. It is not like there is a ton of employment growth for top earners, and not many opportunities for those at the bottom. We are not exactly seeing a hollowing out of middle-earner jobs either – although certainly those are growing slowly or not at all.
Four years after the recession, the Canadian job market is still a kind of work in progress. Now, well into the fifth post-recession year, there is still a lot of caution in the hiring of any but the lowest-paid workers. It remains to be seen whether employers will feel the need, the desire or the confidence to step up their hiring of anyone else.
Linda Nazareth is a Senior Fellow at the Macdonald-Laurier Institute. Her book Economorphics: The Trends Changing Today into Tomorrow will be published by Relentless Press in January, 2014. www.economorphics.com